Stock Picks

These Could Be the Best Digital Marketing Trades

digital marketing

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    Advertising is big business because it is the business of persuading consumers. Advertisers have courted consumers for hundreds of years, but the business is one of almost constant change. The latest changes, like many of the previous ones are driven by changes in technology.

    Digital marketing refers to advertising delivered through digital channels such as search engines, websites, social media, email, and mobile apps. There are a number of technologies to consider in this field.

    What is Digital Marketing?

    Paid search is also called pay per click (PPC) advertising. It refers to the “sponsored result” users typically see in search engine results page (SERP). Advertisers only pay when their ad is clicked. These ads are flexible and can be effective for a number of different type of advertisers.

    But, there is no one size fits all to digital marketing. So, advertisers have other tools at their disposal.

    Search engine optimization, or SEO, is defined as “the process of optimizing the content, technical set-up, and reach of your website so that your pages appear at the top of a search engine result for a specific set of keyword terms.

    Ultimately, the goal is to attract visitors to your website when they search for products, services, or information related to your business.

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  • SEO can almost be viewed as a set of best practices for good digital marketing. It enforces the need for a well-constructed and easy-to-use website, valuable and engaging content, and the credibility for other websites and individuals to recommend you by linking to your site or mentioning it in social media posts.”

    The importance of SEO and PPC can be seen in the chart below.

    digital marketing

    Source: marketo.com

    Another important tool for digital markets is social media marketing. As experts explain, “Many [users] rely on social networks to discover, research, and educate themselves about a brand before engaging with that organization.

    For marketers, it’s not enough to just post on your Facebook and Twitter accounts. You must also weave social elements into every aspect of your marketing and create more peer-to-peer sharing opportunities.

    The more your audience wants to engage with your content, the more likely it is that they will want to share it. This ultimately leads to them becoming a customer. And as an added bonus, they will hopefully influence their friends to become customers, too.”

    Digital marketing also includes email marketing and mobile marketing.

    The Leaders In the Field Are Easy to Spot

    According to investors.com, “The “digital duopoly” of Alphabet’s (GOOGL) Google and Facebook (FB) is set to rake in a combined total of $60 billion in U.S. digital ad revenue this year.”

    This market will be difficult for new entrants to gain traction in. But, the luck that Alphabet and Facebook have does not extend to “Connected TV.” That’s the advertising industry’s term for on-demand video and live TV streaming provided via the internet.

    There are a number of potential winners in that emerging technology. And, analysts believe the industry could grow rapidly.

    “Television could become the largest digital advertising market. There’s a massive shift underway from traditional cable to on-demand and OTT. And, it’s accelerating” said Mark Douglas, CEO of SteelHouse. “Those broadcast ad dollars have to follow consumers.”

    The worldwide broadcast TV market is expected to grow 2.5% in 2018, to $183 billion, forecasts Magna Global. Some 55 million U.S. adults will cut the cord by 2022, according to eMarketer, up from 24.9 million in 2017.

    The rise of Connected TV comes as some big advertisers, such as Procter & Gamble, raise questions over the impact of digital ads. Consumer brands are increasingly concerned about fake web traffic as robotic bot software spreads.

    Among the most prominent companies in the Connected TV sector is The Trade Desk, Inc. (Nasdaq: TTD).

    The company provides a self-service platform that enables clients to purchase and manage digital advertising campaigns across various advertising formats, including display, video and social, and on a range of devices, including computers, mobile devices and connected television.

    Its platform enables a media planner or buyer at an advertising agency to purchase digital media programmatically on various media exchanges and sell-side platforms; acquire and use third-party data to optimize and measure digital advertising campaigns; deploy their, or their client’s, own first-party data in order to optimize campaign efficacy; link digital campaigns to offline sales results or other business objectives; access other services, such as its data management platform and publisher management platform marketplace, and use its user interface and application programming interfaces (APIs) to build their own technology on top of the company’s platform.

    The company’s growth has been rapid.

    marketing data

    Source: company data

    The rapid growth in sales, averaging 90.6% a year over the past three years, has driven the stock price higher.

    TTD weekly

    While Trade Desk is not alone in the industry, competitors include MediaMath, SteelHouse, and Samba TV, TTD is publicly traded.

    Roku Is Another Potential Trade

    Roku (Nasdaq: ROKU), according to the company, “pioneered streaming to the TV. We connect users to the movies, TV shows and music they love – and we provide content providers and advertisers with access to our large, growing and highly engaged TV audience.

    As of June 30, 2018, we had 22 million active accounts, and we stream billions of hours of content every quarter. We have never been more confident that someday all TV – and all TV advertising – will be streamed.”

    This content allows for targeted marketing and the stock has been in a volatile uptrend since its IPO in late 2017.

    ROKU weekly chart

    Digital marketing will be a large market because that is where consumers are driving the industry. As they abandon traditional TV, the advertisers will move with them.

    That means investors have the potential for gains in the industry. They could bet on the industry giants which include Facebook and Alphabet. Or, they could get ahead of the trend and look for companies capable of growing with the new industry. TTD and ROKU could be the leading edge of advertising.